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The meaning of place of 'effective management' in the context of South African domestic tax law

  • Authors: Daniels, Paul
  • Date: 2012
  • Subjects: Double taxation -- Treaties , Management
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:8960 , http://hdl.handle.net/10948/d1018822
  • Description: South Africa has a residence based system of taxation in which South African tax residents are taxed on their worldwide income. A company or other artificial person is regarded as a South African resident for tax purposes if it is incorporated, established or formed in South Africa or if its ‗effective management‘ is located in South Africa. Where a tax treaty determines in terms of its tie breaker rule that an artificial person is not resident in South Africa for treaty purposes, the company will also not be regarded as a tax resident in terms of South African domestic law. Treaties to which South Africa is party will often use the effective management‘ as the tie-breaker where a person other than an individual is resident in both Contracting states in terms of the respective states‘ domestic laws. The tests of ‗incorporation, established and formed‘ provide simplicity and certainty to governments but are easily open to manipulation by taxpayers. Therefore, the legislature found it necessary to incorporate effective management‘ as a test for residency into the Act. Effective management‘ is a substance over form concept which be described as a function which embodies the periodic, most senior executive management functions, which are required for the management of the affairs of the entity as whole. The test of effective management‘ by its very nature is concerned with where the crucial decisions are made in order to make a business function. To identify the location of effective management‘ it is necessary to enquire who calls the shots‘ in the context of the management of the company as opposed to who controls the company notwithstanding that there may in certain instances be overlap between the two functions. It is submitted that any person who, on the face of it seems unconnected to a company, could effectively manage‘ a company if that person is, in substance, responsible for the most senior executive management functions of the company. The discussion paper issued by SARS recognises the principal difficulties experienced with its current interpretation of the concept and makes valuable points, concessions and recommendations. It also recognised that the 'calling of shots' by the most senior executive is a critical marker of effective management‘ and that control of a company is irrelevant in determining effective management‘. To determine who effectively manages‘ a company each situation would have to be analysed on its own as it is not possible to create a definitive rule on the concept. In many cases the nature of the entity and its modus operandi would have to be taken into account to determine effective management.
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  • Date Issued: 2012

The relevance and fairness of the JSE ALTX PRE-IPO share pricing methodologies

  • Authors: Magliolo, Jacques
  • Date: 2012
  • Subjects: Johannesburg Stock Exchange , Stocks -- Prices -- South Africa , Capital market -- South Africa , Stocks -- Prices -- South Africa -- Econometric models
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:9018 , http://hdl.handle.net/10948/d1018652
  • Description: This three year indepth study was prompted after a decade of working as a corporate advisor for numerous stockbroking firms' corporate advisory and listing divisions. An overwhelming lack of discernible pricing methodology for IPOs on the JSE's Main Board and failed Venture Capital and Development Capital Markets was transferred to the new Alternative Exchange (AltX). This prompted lengthly discussions with former head of JSE's AltX Noah Greenhill. Such discussions are set out in this dissertation and relate to pricing methodologies and the lack of guidance or legislation as set out in the JSE's schedule 21 of Listing requirements. The focus of this dissertation is thus centred on whether the current adopted methodologies to establish a fair and reasonable pre-IPO share price is effective. To achieve this, global pricing methodologies were assessed within the framework of various valuation techniques used by South African Designated Advisors.
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  • Date Issued: 2012

The relevance of relationship marketing on the sustainability of Zimbabwe banks

  • Authors: Mwanyisa, Tafadzwa
  • Date: 2012
  • Subjects: Relationship marketing -- Zimbabwe , Customer relations -- Zimbabwe , Information technology -- Zimbabwe , Banks and banking -- Zimbabwe
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:9355 , http://hdl.handle.net/10948/1610 , Relationship marketing -- Zimbabwe , Customer relations -- Zimbabwe , Information technology -- Zimbabwe , Banks and banking -- Zimbabwe
  • Description: Mass marketing also referred to as traditional marketing, has been criticised for trying to appeal to everyone, without necessarily providing for customers’ needs and wants. Therefore, the traditional marketing mix has been deemed ineffectual in a highly competitive and ever-changing business world, especially in the banking sector. Changes in the marketing environment have led to the development of new concepts such as relationship marketing. The fundamental concept of relationship marketing involves maximising the longterm benefits for the bank and the customer, resulting in a series of transactions, which allow a long-term relationship to be established and maintained. In short, it is a marketing concept that revolves around building and maintaining a long-term link or bond with one’s customers. The Zimbabwean banking sector has been affected by the country`s political and economic turmoil over the past decade. The collapse of the economy has affected the banking sector and its relationship with clients. During the economic crisis, Zimbabwean banks were unable to meet the basic international requirements of the Basel Accord, and as such, no profits were made. Borrowers had problems repaying existing loans; and banks also became reluctant to lend more, as a liquidity problem in the financial system was prominent. In 2009, a new government was formed which introduced the multi-currency system and the economy went on a recovery path. Given the nature of the economy of Zimbabwe, relationship marketing becomes an indispensible marketing tool that banks can use. The main purpose of the research was to investigate the relevance of relationship marketing on the sustainability of Zimbabwean banks. Five independent variables (customer relations, product attributes, promotion and service delivery and information technology) were identified and were tested against one dependent variable (sustainability of banks). A positivist research paradigm approach was used to conduct the research. The approach uses the quantitative method of research to establish causal relationships. Null (Ho) and alternative hypotheses (Ha) were formulated in x order to test the relationship between variables. A five point Likert scale questionnaire was developed and administered in five major commercial banks in Harare, Zimbabwe namey; Banc ABC, Barclays bank, Commercial Banks of Zimbabwe, Stanbic Bank and Standard Chartered Bank. The five major banks were selected in terms of market capitalisation as well as total deposit share among other things. The empirical results revealed that five of the independent variables positively correlated with the dependent variable implying that they all have an impact on bank sustainability. However, the current situation (2011) in Zimbabwe shows that only two independent variables (product variables and service delivery) have any impact on bank sustainability. In other words, there was a relationship between product attributes and sustainability of banks. Additionally, there was a relationship between service delivery and sustainability of Zimbabwean banks. Conclusions sited that product attributes and service delivery, as variables of relationship marketing, if implemented desirably could salvage the lost confidence and contribute to bank sustainability in Zimbabwe. Therefore, recommendations given by the researcher extensively focused on the two variables that have a relationship with Zimbabwean banks’ sustainability; briefly on the three variables (customer relations, promotion and information technology) that had no relationship.
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  • Date Issued: 2012

The valuation of amounts for the purpose of inclusion in gross income

  • Authors: Spearman, Tarryn Leigh
  • Date: 2012
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:887 , http://hdl.handle.net/10962/d1001641
  • Description: The present research investigates the valuation of amounts for the purpose of inclusion in gross income. Because the gross income definition in section 1 of the Income Tax Act includes "amounts in cash or otherwise", valuations are often required in order to establish a value in money terms for amounts received or accrued in a form otherwise than in cash. The basis on which these valuations are made can vary and the courts have frequently been called upon to decide on the correct method of valuation. There has been an ongoing debate in the courts as to whether a strict objective approach or a more flexible subjective approach should be adopted when valuing an amount in a form other than cash, which was finally settled in the decision by the Supreme Court of Appeal in CIR v Brummeria Renaissance (Pty) Ltd, which held that an objective approach must be followed. The present research will demonstrate how the strict rule of interpretation tends to result in purely objective valuations as it requires that the ordinary grammatical meaning of words be applied and does not allow the court to consider the purpose of the legislation or introduce any subjectivity based on the circumstances of each individual taxpayer and the facts of each particular case, which a purposive interpretation approach does. The purposive approach to interpretation is therefore more closely aligned with the subjective approach to valuation. Both the objective and subjective approaches to valuation have advantages and disadvantages, which are addressed in the research. The need for certainty in taxation was articulated as early as 1776 by Adam Smith in his Wealth of Nations. The objective approach appears to create a level of consistency as all income received by a taxpayer is effectively taxed as if received by a third party in an arm’s length transaction. The approach has led to unfair decisions at odds with economic reality and generally accepted accounting principles, which could be challenged on the basis of a lack of equity and fairness as required by the Constitution of the Republic of South Africa. The research demonstrates that an objective method of valuation is neither fully objective nor appropriate in certain circumstances, while a subjective approach may be more appropriate as it ensures that each taxpayer’s individual rights are protected. Although the subjective approach successfully addresses the issue of fairness, it threatens to introduce an unacceptable level of inconsistency and is, in reality, not always administratively feasible. The present research concludes that a trade-off between fairness and consistency is often necessary.
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  • Date Issued: 2012

Trends and volatility in residential property prices in South Africa

  • Authors: Anyikwa, Izunna Chima
  • Date: 2012
  • Subjects: Housing -- Prices -- South Africa
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:9012 , http://hdl.handle.net/10948/d1018221
  • Description: This study sought to empirically investigate trends and volatility in residential property prices in South Africa using quarterly data over the period 1980Q1 to 2011Q4. The empirical analysis uses a range of unit root and stationarity tests as well as a number of ARCH-family of models. The results from the trend analysis suggest that the behaviour of house prices in South Africa follows a random walk process. The randomness in the behaviour of house prices could be attributed to permanent effect of shock. Investigation into the dynamic behaviour of the house prices supports the existence of conditional volatility that is time-varying and highly persistent. Moreover, volatility is found to be asymmetric in news suggesting evidence of anti-leverage effects. These findings have important portfolio implications especially, considering the fact that large-scale losses are possible if house prices exhibit the type of persistent in behaviour as captured in this study. Also, the existence of asymmetric effects in volatility suggests that more caution needs to be placed on news arrival as they may have significant impacts on the house price behaviour. Accordingly, this study suggests the need for residential property market to be treated like other asset markets with regards to risk.
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  • Date Issued: 2012

A conjoint choice experiment analysing water service delivery in three Eastern Cape Municipalities

  • Authors: Hosking, Phillipa
  • Date: 2011
  • Subjects: Municipal service -- South Africa -- Eastern Cape -- Marketing , Water Supply -- South Africa -- Eastern Cape
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:9357 , http://hdl.handle.net/10948/1378 , Municipal service -- South Africa -- Eastern Cape -- Marketing , Water Supply -- South Africa -- Eastern Cape
  • Description: This study considers the nature of South African municipal water service delivery, and how marketing strategies can provide a framework for better management of this service. It reflects on the elements that guide municipal decision making and evaluates user preferences for levels of the municipal “water service mix” by employing conjoint analysis. Particular attention is paid to consumer willingness to pay for improvements in the “water service mix”. The study argues that the values municipal consumers attach to the variables of the water service mix need to be better incorporated into decision making regarding water service delivery, and that conjoint analysis is an informative method to assist in generating this information. The study outlines a water service marketing challenge and methods of research followed to deal with it (Chapter One) and the nature of the laws and institutions governing water service provision in South Africa (Chapter Two). The task of providing water services is delegated to Water Service Providers (municipalities). The key variables of the water service mix from the consumers perspective include; quality of the water, rate of flow from tap, interruption of water flow, sewerage disposal, assurance of supply, and water service tariffs (Chapter Three). The study covers the areas of Amathole, Kouga and Nelson Mandela Bay Municipalities' (Chapter Five). The method of marketing analysis applied is conjoint analysis, alternatively known as choice experiment analysis. An overview of the method is provided and its application to three samples of one hundred residents at each of the study sites is described in Chapter Four. The responses of the three hundred residents provide the basis for the results. Respondents were requested to make a series of choices between alternative water service mixes consisting of six variables differentiated by three levels (Chapter Three). In making these choices they implicitly compared and weighed up the relative worth of the selected variables against each other. The findings of the analysis were diverse (Chapter Six); two of the three estimated models did not yield significant results. An interpretation of these results showed that the respondents of the Kouga municipality were willing to pay R65.05 more (per 10 xii Kilolitres of water) than their current monthly tariff for a marginal improvement in water quality, R57.29 more (per 10 Kilolitres of water) per month for a marginal improvement in sewerage disposal and R21.90 (per 10 Kilolitres) per month for marginal improvements in assurance of water supply. Findings showed that willingness to pay for reduced interruptions and improved flow rates was lower and not as highly valued as the abovementioned variables. Most of these findings were consistent with similar international and national studies showing their reliability. Although there has been significant improvement in extending the reach of the network since 1994, the standards of water service provision in South African municipalities do not appear to have improved. The results of this study mirror a number of concerns that have been expressed about the standards of service, particularly sanitation (in publications like the Green Drop Report). Municipal service delivery in these areas would appear to be constrained by a number of issues including a lack of public involvement, legislation, limited financial resources and institutional capabilities. However, it is a service that is too vitally important to be allowed to deteriorate. Marketing analyses can make a valuable contribution to allocating and managing the scarce resources to best satisfy the consumers of water services (Chapter Seven). When consumer orientation is formally introduced as the main objective into the thinking of the service provider, it becomes untenable to offer poor service delivery. But that is exactly what many municipalities appear to be doing. There is a need to get back to the basics – where the consumer is king. This analysis concludes that consumers want, above all else, assurance of water supply, a high quality of water, and safe environmentally sensitive disposal of waste water. It is recommended that municipalities not lose sight of the fact that price is an important part of the marketing mix. From the paying consumers perspective, when the government incorporate too many other considerations into pricing of water services they are, in effect, disengaging price from the marketing mix by not being sensitive to consumer needs. This approach shows a weak marketing strategy, and may result in dissatisfied consumers who may become unwilling to pay for their water services – an outcome that the researcher would discourage.
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  • Date Issued: 2011

A critical analysis of the socioeconomic impact assessments of the Addo Elephant National Park

  • Authors: Rose, Matthew Calvin
  • Date: 2011
  • Subjects: Addo Elephant National Park (South Africa) South African National Parks Economic impact analysis -- South Africa -- Addo Elephant National Park Environmental impact analysis -- South Africa -- Addo Elephant National Park
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:964 , http://hdl.handle.net/10962/d1002698
  • Description: Impact assessment is a requirement for development in many countries across the globe, seeking to inform the decision-maker as to the environmental, social and economic impact of an ongoing or proposed project. Socioeconomic impact assessment (SEIA) is a means of informing decision-makers as to the socioeconomic effects a project could have, or is having, thus contributing to informing adaptive management practices. However, the tendency of socioeconomic impact assessment to highly quantitative economic methods of analysis raises the question of whether the desired results are achieved by the process. The purpose of the research was to determine whether highly quantitative forms of economic analysis are suitable for measurement of impacts in a social context where distributive as well as net impact is important; to critically analyze the method utilized in achieving highly quantitative economic impact assessment results; and lastly to draw conclusions and make recommendations regarding the efficacy of monitoring processes used to inform adaptive management practices. The research was conducted by means of a case study focusing on three SEIAs carried out on the same entity, namely the Addo Elephant National Park. Managed by South African National Parks (SANP), it began expanding its borders in the early 2000s. Funded by the World Bank, SANP was required to carry out a comprehensive Strategic Environmental Assessment (SEA) in 2003 to ensure the expansion did not have negative environmental, social and economic repercussions, and where such consequences were unavoidable, to ensure that mitigation and management thereof was informed by useful monitoring exercises. Given the need for resettlement and issues of economic distributive concern raised in the 2003 SEA, the three socioeconomic impact assessments conducted from 2005 – 2010 as part of the ongoing monitoring exercises formed an ideal framework for answering the primary research questions. The findings indicate that despite consistent terms of reference, different assessors interpret mandates from the commissioning body in different ways, leading to varied applications of the same theory, some methodologically better than others. Economic multiplier analysis was found to be inadequate as a measure of the distributive effects of economic impact. Moreover, a lack of consistency, accountability and transparency in the monitoring process led to three sets of results that were incomparable over time and thus inadequate as a means to inform adaptive management practices. Asymmetries of and between power and expertise in the commissioning body and the assessors led to breakdowns of the assessment process in terms of accountability and integrity and resulted in a failure to properly define the scope of the study and measure the relevant indicators. The following recommendations were made: that the economic multiplier method be complemented by additional methods of analysis when utilized in disparate social contexts where distribution of economic benefit is important; that monitoring practices be systematized at an early stage of the process to ensure comparable results useful in informing ongoing management practices; and that what an assessment measures and how it measures it be clarified with reference to an objective source. Finally, the number of factors for consideration in any impact assessment means that measurement of the full picture suffers resource constraints, emphasizing the need for impact assessment oversight to recognize the deficiencies of the process whilst still acknowledging that ‘some number is better than no number’.
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  • Date Issued: 2011

A critical analysis of the tax implications for small and micro businesses

  • Authors: Mkhize, Vukani
  • Date: 2011
  • Subjects: Small business -- Taxation -- Law and legislation , Taxation -- Law and legislation
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:8953 , http://hdl.handle.net/10948/1338 , Small business -- Taxation -- Law and legislation , Taxation -- Law and legislation
  • Description: The South African economy has seen an increase in small businesses since 1994. This increase has been caused by an increase in unemployment rate and government interventions to promote small businesses. The government has through the National Treasury introduced various tax legislations to simplify and facilitate the tax processes that small businesses have to comply with. The discussion contained in this treatise seeks to critically analyse the tax implications for small and micro businesses. One of the small business tax legislations, Small Business Corporations, is discussed in chapter 2. The Small Business Corporation legislation provides for two key concessions to qualifying small businesses. The first concession is the progressive tax rates that are lower than normal tax rates at taxable income level below R300 000. The second concession is the special capital allowances that the qualifying small business is entitled to. The tax amnesty for small businesses was introduced in July 2006 to provide an opportunity to small businesses which were not up to date with their tax affairs, to regularise their tax affairs. Small businesses had to meet certain requirements and pay an amnesty levy ranging from 2 to 5 percent of their taxable income. The tax amnesty on small businesses was not as effective as intended, however a slight increase in the South African taxpayer base was achieved. The voluntary disclosure programme has recently been introduced in November 2010, to provide an opportunity for all businesses to voluntarily disclose their previous defaults without being subjected to criminal prosecution and penalties. The government further attempted to simplify the tax compliance process by introducing turnover tax legislation. The turnover tax provides for a single tax system that does away with the need to account for normal tax, capital gains tax, secondary tax on companies and value added tax. The turnover tax system is optional to qualifying small businesses. The turnover tax is calculated by simply applying a tax rate to taxable turnover. Small businesses need carefully consider whether turnover tax will be beneficial to them. It is not advisable for small businesses that are making losses to adopt turnover tax. Another small business tax legislation that promises to be effective is the venture capital incentive. This legislation provides for deduction of expenditure actually incurred in the acquisition of shares by qualifying businesses. It appears that, given the challenges that small businesses still face, the government still has a lot more to do to simplify the tax process for small businesses.
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  • Date Issued: 2011

A forecasting model for photovoltaic module energy production

  • Authors: Swanepoel, Paul
  • Date: 2011
  • Subjects: Photovoltaic power systems -- Forecasting
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:10563 , http://hdl.handle.net/10948/1420 , Photovoltaic power systems -- Forecasting
  • Description: Energy is of concern for governments and economies all over the world. As conventional methods of energy production are facing the prospect of depleting fossil fuel reserves, economies are facing energy risks. With this tension, various threats arise in terms of energy supply security. A shift from intensive fossil fuel consumption to alternative energy consumption combined with the calculated use of fossil fuels needs to be implemented. Using the energy radiated from the sun and converted to electricity through photovoltaic energy conversion is one of the alternative and renewable sources to address the limited fossil fuel dilemma. South Africa receives an abundance of sunlight irradiance, but limited knowledge of the implementation and possible energy yield of photovoltaic energy production in South Africa is available. Photovoltaic energy yield knowledge is vital in applications for farms, rural areas and remote transmitting devices where the construction of electricity grids are not cost effective. In this study various meteorological and energy parameters about photovoltaics were captured in Port Elizabeth (South Africa) and analyzed, with data being recorded every few seconds. A model for mean daily photovoltaic power output was developed and the relationships between the independent variables analyzed. A model was developed that can forecast mean daily photovoltaic power output using only temperature derived variables and time. The mean daily photovoltaic power model can then easily be used to forecast daily photovoltaic energy output using the number of sunlight seconds in a given day.
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  • Date Issued: 2011

A regulationist approach to South Africa and a critique of inflation targeting

  • Authors: Bax, Ryan Michael Jonathan
  • Date: 2011
  • Subjects: Inflation (Finance) -- South Africa International finance Economic development -- South Africa Sustainable development -- South Africa Inflation targeting -- South Africa
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:1036 , http://hdl.handle.net/10962/d1004533
  • Description: Since the 1970s, the international economic system has become prone to the volatility and undue effects associated with booms and busts. This forty year period spanning the present has exhibited restrained growth and repressive economic development. Critical changes to the system are presented by the transition from "Fordism" to the post 1970s neoliberal regime and the globalization of world markets. Underpinning this transformation is an ideological shift towards free market capitalism and the adoption of "reduced form" market models. These "reduced form" models appear to hinder economic sustainability as their grounding in economics fails to account for real economic activity. This thesis aims to provide a more holistic perception of sustainability, one that provides a sound basis on which to develop sustainable economic policy. The Regulationist Approach presents the requisite understanding of economic sustainability required within this research. The inclusion of economic, historical and socio-political fields of research proposes a wider understanding of the political economy and sustainability. The application of the Regulation Approach to the South African economy illustrates many problem areas that require attention. The examination found that firstly, aggregate demand in the South African economy was unsustainable due to the debt driven nature of demand under the asset price bubble of the mid to late 2000s. Secondly, aggregate supply also proved unsustainable as government is failing to provide any substantive growth within important sectors of the economy such as education and the provision of general services. Furthermore, the adoption of inflation targeting in South Africa poses a barrier to sustained economic growth as it focuses singularly on price inflation. The "reduced form" model of inflation targeting fails to account for market failures and a number of vital indicators of sustainability most notably, debt levels and asset prices. The inclusion of these indicators, and financial stability more generally, are found to provide a more holistic and sustainable approach to macroeconomic policymaking.
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  • Date Issued: 2011

Adjustment of commercial banks' interest rates and the effectiveness of monetary policy: evidence from Anglophone West Africa

  • Authors: Bangura, Lamin
  • Date: 2011
  • Subjects: Monetary policy -- Africa, West , Banks and banking -- Africa, West , Interest rates -- Africa, West
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:951 , http://hdl.handle.net/10962/d1002685 , Monetary policy -- Africa, West , Banks and banking -- Africa, West , Interest rates -- Africa, West
  • Description: Most central banks use short-term interest rates as their main instrument of monetary policy. It is assumed that a change in policy rate will influence interest rates set by commercial banks, but this is not usually the case. Commercial banks adjust their interest rates in response to changes in policy rate with lags, which make their interest rates sticky. Stickiness in commercial banks interest rates have been seen as an obstacle to the smooth transmission of monetary policy decisions. Despite the importance of the transmission process, little attention has been given to a systematic measurement of the degree of response of commercial banks‟ interest rates to changes in monetary policy stance in the Anglophone West African countries, specifically within the West African Monetary Zone (WAMZ) economies. Against this backdrop, this study explores the interest rate adjustment dynamics using monthly interest rate series on discount rate, treasury bill rate, commercial banks‟ deposit and lending rates from 1989 to 2009 (for Gambia, Nigeria and Sierra Leone) and from 2000 to 2009 (for Ghana). Specifically, the study set out to examine how lending and deposit rates respond to changes in the official rates and to see whether there is a convergence among the rates over time. Also, to examine the relative adjustment of commercial bank lending rates to changes in the official rate when there is disequilibrium. The analyses were twofold: a full sample period and a rolling window analysis. Following Cottarelli and Kourelis (1994), the study employed cointegration technique and an asymmetric error correction model to obtain the short-run and long-run parameters from which the error correction coefficients, mean adjustment lags and asymmetric mean adjustment lags were estimated. The results for the entire sample period revealed that the long-run pass-through in Nigeria was 81% and 67% for lending rates and deposit rates respectively. In Ghana, it was 66% and 69% for lending and deposit rates respectively. While in Sierra Leone, long-run pass-through was 62% and 72% for lending and deposit rates respectively. In Gambia, it was 50% and 40% for lending and deposit rates respectively. On the other hand, the short-run pass-through was found to be lower compared to the long-run pass-through: in Nigeria it was 66% and 47%; in Gambia, 26% and 29%; in Sierra Leone, 30% and 13%; and in Ghana, -6% and 35% for lending and deposit rates respectively in each country. The pass-through estimates for the rolling windows were mixed for short-run and long-run pass-through. The mean adjustment lags suggest that the speed of adjustment of Lending rates for full sample period were two, two, seven and twelve months in Nigeria, Ghana, Sierra Leone and Gambia respectively. While for deposit rates they were five, six, seven and eighteen for Ghana, Nigeria, Gambia and Sierra Leone respectively. The average speeds of adjustment for the rolling windows were four and five months for lending and deposit rates respectively. Weak evidence of convergence was found in lending and deposit rates in the short-run and long-run pass-through among the countries. However, the results suggest that the magnitude and speed of the pass-through amongst the countries on average were high compared to emerging Asian countries. Significant asymmetric adjustments were found in the lending rates for Gambia and Sierra Leone, while in Gambia and Nigeria there were asymmetries in deposit rates. Based on the evidence provided, interest rate pass-through is high in Nigeria and Ghana compared to Gambia and Sierra Leone and this calls for the harmonization of financial policies on the part of the financial authorities in the WAMZ. Viewed solely from an interest rate pass-through, the lack of convergence among the countries suggests that WAMZ is far from ready for a monetary union. The relatively low pass-through in some of the countries suggests rigidity in the banking system which may be due to underdevelopment of the system. Thus efforts geared toward strengthening the banking system and the financial system as whole would further enhance the prospect of a monetary union among them.
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  • Date Issued: 2011

An analysis of the influence of domestic macroeconomic variables on the performance of the South African stock market sectoral indices

  • Authors: Hancocks, Ryan Lee
  • Date: 2011
  • Subjects: Johannesburg Stock Exchange , Stock price indexes -- South Africa , Interest rates -- South Africa , Macroeconomics -- Econometric models
  • Language: English
  • Type: text , Thesis , Masters , MCom
  • Identifier: vital:954
  • Description: An econometric study was undertaken to determine the extent to which selected macroeconomic variables influenced stock market prices on the All-Share, Financial, Mining and Retail Indices of the Johannesburg Stock Exchange in South Africa from 1996:7 to 2008:12. The Johansen cointegration method was used to determine whether cointegrating relationships existed between the macroeconomic variables and the stock market indices. A Vector Error Correction model was estimated and found significant results that money supply, inflation, long and short- run interest rates, and the exchange rate all had an influence on stock market prices. Further, the VECM results for each sector indicated that certain macroeconomic variables had differing influences on each sector of the stock market. Impulse Response tests indicated that the selected macroeconomic variables caused shock to the sectoral indices in the short-run but that the effect was lagged. The Variance Decomposition tests conducted supported earlier evidence that the macroeconomic variables had a strong level of sectoral index determinacy in the long run. The results found that the All-Share and Financial Indices were negatively influenced by inflation and short term interest rates in the long run, while the Financial Index also had a negative relationship with long-run interest rates. Money supply was found to have a positive effect on all the indices. A weakening of the exchange rate was found to have a positive influence on both the Retail and Mining Indices, while it negatively affected the All-Share and Financial Indices. The long-run interest rate had a positive influence on both the Retail and Mining Indices. Overall the study finds that macroeconomic variables are important determinants of stock market prices in South Africa and that it is important to examine each sector of the stock market separately to capture what are different effects. The limitations of the study are that a different measure for exchange rates from the nominal rand/dollar exchange rate used here may yield more decisive results and provide insight into the link between exchange rate behaviour and performance of especially the retail sector.
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  • Date Issued: 2011

An analysis of the long run comovements between financial system development and mining production in South Africa

  • Authors: Ajagbe, Stephen Mayowa
  • Date: 2011
  • Subjects: Economic development -- South Africa , Econometric models , Mineral industries -- Economic aspects -- South Africa , South Africa -- Economic conditions , South Africa -- Economic policy , Principal components analysis , Cointegration , Stock exchanges -- South Africa , Banks and banking -- South Africa , Foreign exchange rates
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:955 , http://hdl.handle.net/10962/d1002689 , Economic development -- South Africa , Econometric models , Mineral industries -- Economic aspects -- South Africa , South Africa -- Economic conditions , South Africa -- Economic policy , Principal components analysis , Cointegration , Stock exchanges -- South Africa , Banks and banking -- South Africa , Foreign exchange rates
  • Description: This study examines the nature of the relationship which exists between mining sector production and development of the financial systems in South Africa. This is particularly important in that the mining sector is considered to be one of the major contributors to the country’s overall economic growth. South Africa is also considered to have a very well developed financial system, to the point where the dominance of one over the other is difficult to identify. Therefore offering insight into the nature of this relationship will assist policy makers in identifying the most effective policies in order to ensure that the developments within the financial systems impact appropriately on the mining sector, and ultimately on the economy. In addition to using the conventional proxies of financial system development, this study utilises the principal component analysis (PCA) to construct an index for the entire financial system. The multivariate cointegration approach as proposed by Johansen (1988) and Johansen and Juselius (1990) was then used to estimate the relationship between the development of the financial systems and the mining sector production for the period 1988-2008. The study reveals mixed results for different measures of financial system development. Those involving the banking system show that a negative relationship exists between total mining production and total credit extended to the private sector, while liquid liabilities has a positive relationship. Similarly, with the stock market system, mixed results are also obtained which reveal a negative relationship between total mining production and stock market capitalisation, while a positive relationship is found with secondary market turnover. Of all the financial system variables, only that of stock market capitalisation was found to be significant. The result with the financial development index reveals that a significant negative relationship exists between financial system development and total mining sector production. Results on the other variables controlled in the estimation show that positive and significant relationships exist between total mining production and both nominal exchange rate and political stability respectively. Increased mining production therefore takes place in periods of appreciating exchange rates, and similarly in the post-apartheid era. On the other hand, negative relationships were found for both trade openness and inflation control variables. The impulse response and variance decomposition analyses showed that total mining production explains the largest amount of shocks within itself. Overall, the study reveals that the mining sector might not have benefited much from the development in the South African financial system.
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  • Date Issued: 2011

An econometric analysis of the impact of economic freedom on economic growth in the SADC

  • Authors: Gorlach, Vsevolod Igorevich
  • Date: 2011
  • Subjects: Economic development -- South Africa , Economic development
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:8983 , http://hdl.handle.net/10948/1539 , Economic development -- South Africa , Economic development
  • Description: The conventional approach to increasing economic growth - increasing inputs, such as labour and capital, is not always possible. The wider, fundamental sources of economic growth need to be considered too. Foreign aid is a temporary lifeline and does not spur economic growth. Conversely, financial assistance negatively affects growth and can hamper development prospects. Economic freedom and economically freer countries have been associated with higher growth rates, higher per capita incomes, greater volumes of trade, prosperity and overall wellbeing. By improving their economic freedom, deregulating the economy and allowing economic freedom to prosper, countries can experience sustained GDP growth. Previous studies have shown that economic freedom and economic growth are exponentially related - and that by initially becoming freer, countires can increase their growth rates at higher rates. The main objective of the SADC is to achieve development and economic growth, to alleviate poverty and enhance the standard and quality of life for the peoples of Southern Africa. The SADC is attempting to achieve economic integration through macroeconomic convergence. A number of macroeconomic variables have been set to act as primary indicators. These include inflation, fiscal balance, public debt and the current account balance. By introducing the concept that economic freedom can lead to higher growth rates and being able to identify economic freedom, it makes it possible to investigate how the SADC can achieve its set goals by becoming freer. By investigating individual components that constitute the overall freedom index, it becomes possible to establish the relationship that exists between this viriable and economic growth. This will illustrate where deregulation and freedom are most effective and where policy decisions need to be highlighted. The 2008 economic crisis revealed that countries that decreased their economic freedom have fared worse than countries allowing freedom to prosper. Government fiscal stimulus has had no positive impact on growth rates; the negative effects of reducing economic freedom will onlky be fully seen in future years. However, the majority of the SADC countries showed a relatively strong fiscal stance during the recession. This study established whether that a positive relationship between economic freedom and economic growth in the SADC. Secondly, the direction of causality that economic freedom leads to economic growth. The findings reveal that economic freedom fosters economic growth in general, and for the SADC in particular. Empirical evidence has been found for the SADC; and the implications of becoming freer are more fully explained.
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  • Date Issued: 2011

An economic evaluation of a wind power electricity generating farm in South Africa

  • Authors: Menzies, Greig Hamilton
  • Date: 2011
  • Subjects: Wind power -- Economic aspects -- South Africa , Wind power plants -- Environmental aspects -- South Africa , Wind turbines
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:8987 , http://hdl.handle.net/10948/1335 , Wind power -- Economic aspects -- South Africa , Wind power plants -- Environmental aspects -- South Africa , Wind turbines
  • Description: Renewable energy technology has received much attention over recent years. The depletion of known fossil fuel reserves and the volatility of international fuel prices require that society looks beyond the current coal-dominated electricity generation methods. Wind energy is an internationally well-established technology with large markets in major countries around the world, such as the USA and Germany. South Africa has the potential to generate large amounts of electricity from the wind because of the strength of the country’s wind resource. The long coast line and open areas are ideal for the exploitation of wind energy. A wind farm project has been proposed for development near the town of Jeffrey’s Bay, in the Eastern Cape. The proposed project involves the construction and installation of a 15MW wind farm, consisting of 6-10 turbines standing 120m tall, over an area of 20ha.There are indirect costs and benefits (externalities) associated with a wind farm project and it is important that projects such as these are evaluated from a social standpoint. The aim of this study was to determine the compensation required by residents for siting a wind farm in their area. This compensation was then used as a component of an overall evaluation of the project.
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  • Date Issued: 2011

An investigation into international transfer pricing guidelines and the anomalies arising from business restructurings by multi-national enterprises

  • Authors: Stelloh, Marcus Matthias
  • Date: 2011
  • Language: English
  • Type: text , Thesis , Masters , MCom
  • Identifier: vital:879 , http://hdl.handle.net/10962/d1001633
  • Description: The number of multinational enterprises has increased substantially. In part due to the integration of national economies (the European Union), improvements in communication and technology and the opportunity to reduce costs as a result of globalisation. Transfer pricing and especially business restructuring within multinationals is a fairly new concept.Professional legal and audit firms have different views on how to approach business restructurings. This research analyses important transfer pricing aspects and the anomalies that arise through business restructurings. The research method used in this research paper is primarily qualitative, comprising the analysis of various documentary sources of data. Relevant South African and international case law, tax legislation, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, the Transfer Pricing Aspects of Business Restructurings Discussion Draft and other reports were consulted and analysed. Further the views of recognised legal and tax experts that have been published in technical journals and text books were also considered and examined. A hypothetical example of a business restructuring transaction was constructed in order to illustrate practical issues and different approaches to solving them. The research has argued that the arm’s length principle, which forms the bases of transfer pricing regulation, is not an exact science but theoretically it is the most suitable measure.It may not be able to incorporate all variables, such as the cost savings through synergies of multinational enterprises, but it promotes international trade and investment by ensuring that transactions are based on fair prices. Business restructurings create anomalies in applying the arm’s length principle but these anomalies can be dealt with within the regulatory structure. The business restructuring approach recommended is realistic and pragmatic, but more clarity may be needed in certain circumstances. The research has also discussed the avoidance of transfer pricing audits, including having appropriate transfer pricing policies and documentation.
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  • Date Issued: 2011

Analysis of volatility spillover effects between the South African, regional and world equity markets

  • Authors: Mumba, Mabvuto
  • Date: 2011
  • Subjects: Financial crises International finance Stocks -- Prices -- Africa Stocks -- Prices -- South Africa Capital market -- Africa Capital market -- South Africa Foreign exchange rates Africa -- Economic conditions South Africa -- Economic conditions
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:957 , http://hdl.handle.net/10962/d1002691
  • Description: The current study examines the extent and magnitude by which global and regional shocks are transmitted to the volatility of returns in the stock markets of South Africa, Egypt, Nigeria, Botswana, Mauritius and Egypt. This is done so as to make inferences on the level of the domestic market‟s integration into the regional and world capital markets. By applying multivariate and univariate GARCH models, using weekly data from June 1995 to May 2010, the main empirical findings are threefold. Firstly, the volatility analytical framework finds statistically significant and time-varying volatility spillover effects from the regional and global markets to the South African market. Global shocks are generally stronger and account for up to 23.9 percent of the volatility of South Africa‟s equity market compared to weaker regional factors which account for less than 1 percent of domestic variance. Only in countries with strong bilateral trade and economic links with South Africa, such as Botswana and Namibia, is it found that regional factors are more dominant than global factors for domestic volatility. Compared to the other African markets, the joint influence of foreign shocks on domestic volatility is highest in South Africa and Egypt, two of Africa‟s largest and most developed markets. The results further demonstrate that for all the African markets the explanatory power of both regional and global factors for domestic volatility is not constant over time and tends to increase during turbulent market periods. Secondly, the analysis of the determinants of South frica‟s second moment linkages with the global market suggests that the volatility of the exchange rate plays a cardinal role in influencing the magnitude by which global shocks affect domestic volatility. The increased global integration in the second moments cannot be attributed to either increased trade integration, convergence in inflation rates or to convergence in interest rates between South Africa and the global markets. Lastly, tests were conducted to examine whether there have been contagion effects from the regional and global markets to South Africa from the 1997 Asian crisis and the 2007/8 global financial crisis. The results show no evidence of contagion during either the East Asian currency crisis or the recent global financial crisis to South Africa, while some African markets, such as Egypt, Mauritius and Botswana, exhibit contagion effects from either crisis. Overall, the empirical findings generally support the view that African markets are segmented both at the regional and global levels as domestic volatility is more influenced by local idiosyncratic shocks (the proportion not attributable to either global and regional factors). However, the volatility of South Africa, and to a lesser extent Egypt, remains relatively more open to global influence. This implies that the potential for gains from international portfolio diversification and the scope for success of policies aimed at the stabilisation of equity markets in these markets exist.
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  • Date Issued: 2011

Angel networks as a business start-up financing option in South Africa

  • Authors: Sibanda, Zenzo
  • Date: 2011
  • Subjects: Angels (Investors) -- South Africa Small business -- Finance -- South Africa New business enterprises -- Finance -- South Africa Venture capital -- South Africa Microfinance -- South Africa
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:1164 , http://hdl.handle.net/10962/d1002780
  • Description: The following study is about business angels financing small business start-ups. It explores the aspect of starting up an entrepreneurial venture in which the entrepreneur seeks to secure start-up finance from lenders, raising the various issues that are known to characterise this engagement between the entrepreneur and the lender. Using the phenomenological paradigm, the study seeks to determine the awareness of small scale financing by entrepreneurs in South Africa, to determine the most commonly used source of start-up business funding in South Africa, to assess the extent to which business angel financing could be used to finance businesses in South Africa and to determine the factors impacting the use of business angel financing in South Africa. From these objectives, the study will also seek to determine the extent to which business angel networks could facilitate the financing of business start-ups. Small businesses invariably come up in different policy spheres as the main avenues to social and economic construction across national and regional lines. The importance of a successful business start up to a growing economy should not be underestimated. In line with this is the particular factor of gaining access to start up capital, which continues to emerge as a leading contributor to the success or failure of business start ups. Studies continue to verify that the most common challenge faced by most emerging entrepreneurs is start-up capital, either in the lack of this capital, the unfavourable conditions surrounding its availability, the lack of assets to serve as collateral for its use or the ambiguous flow of crucial information between lenders and providers of finance in the funding relationship (Abor and Biekpe, 2006: 69;Hernandez-Trillo, Pagan and Paxton, 2005: 435, ISPESE, 2005: 7, CDE, 2004: 5; Musengi 2003: 11). Roger Sorheim (2005: 179) refers to business angels as private individuals who offer risk capital to unlisted companies that are struggling to obtain start up capital to finance their business ideas. Business angels are further defined as high net-worth bearers of substantial private capital who predominantly invest in the early stage of high risk high potential return business ventures with a positive further growth potential. Business angel finance is typically a ‘once-off’ early stage form of small firm financing compared to the more frequent later stage venture capitalist funding. Studies show that business angels represent an underutilised wealth creation mechanism when it comes to small firm start-ups as most business angels contribute expertise in addition to finance to the start-ups they get involved in. This brings valuable business insight to the commercialisation of a good business idea. The business angel network exposes a range of potentially viable business prospects to willing investors by facilitating the flow of information about entrepreneurs and their businesses, thereby eliminating ambiguity, information asymmetry and transaction costs (Aernoudt and Erikson, 2002: 178; Van Osnabrugge and Robinson, 2000:374; Macht, 2006:1; Ehlrich, De Noble, Moore and Weaver, 1994:70; Sorheim, 2005:179). To achieve a holistic approach to a phenomenon which appears to be relatively new in South African business circles, the study will follow a qualitative approach in which two categories of populations will be used, one of small business operators and the other of business angels in South Africa. In the study, 20 small business operators and five business angels in Grahamstown will be approached using the convenience and snowballing sampling methods respectively. Face-to-face semi-structured interviews will be used as a data collection method and content analysis will be used as a data analysis tool (Collis and Hussey, 2003:156, Driver, Wood, Segal and Herrington, 2001:32, National Small Business Act ). There has been very limited research on business angels in the South African context, therefore the study would significantly contribute in entrepreneurship, government and small business development circles as it brings about attention to what the researcher predicts is an underutilised business start-up financing option.
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  • Date Issued: 2011

Bayesian logistic regression models for credit scoring

  • Authors: Webster, Gregg
  • Date: 2011
  • Subjects: Bayesian statistical decision theory Credit scoring systems Regression analysis Logistic regression analysis Monte Carlo method Markov processes Financial institutions
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:5574 , http://hdl.handle.net/10962/d1005538
  • Description: The Bayesian approach to logistic regression modelling for credit scoring is useful when there are data quantity issues. Data quantity issues might occur when a bank is opening in a new location or there is change in the scoring procedure. Making use of prior information (available from the coefficients estimated on other data sets, or expert knowledge about the coefficients) a Bayesian approach is proposed to improve the credit scoring models. To achieve this, a data set is split into two sets, “old” data and “new” data. Priors are obtained from a model fitted on the “old” data. This model is assumed to be a scoring model used by a financial institution in the current location. The financial institution is then assumed to expand into a new economic location where there is limited data. The priors from the model on the “old” data are then combined in a Bayesian model with the “new” data to obtain a model which represents all the available information. The predictive performance of this Bayesian model is compared to a model which does not make use of any prior information. It is found that the use of relevant prior information improves the predictive performance when the size of the “new” data is small. As the size of the “new” data increases, the importance of including prior information decreases
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  • Date Issued: 2011

Cointegration in equity markets: a comparison between South African and major developed and emerging markets

  • Authors: Petrov, Pavel
  • Date: 2011
  • Subjects: Cointegration Stock exchanges -- South Africa Stock exchanges -- Developing countries Stock exchanges -- Developed countries South Africa -- Economic conditions Portfolio management -- South Africa Econometrics Autoregression (Statistics)
  • Language: English
  • Type: Thesis , Masters , MCom
  • Identifier: vital:5575 , http://hdl.handle.net/10962/d1005539
  • Description: Cointegration has important implications for portfolio diversification. One of these is that in order to spread risk it is advisable to invest in markets that are not cointegrated. Over the last several decades communication technology has made the world a smaller place and hence cointegration in equity markets has become more prevalent. The bulk of research into cointegration focuses on developed and Asian markets, with little research been done on African markets. This study compares the Engle-Granger and Johansen tests for cointegration and uses them to calculate the level of cointegration between South African and other global equity markets. Each market is compared pair-wise with South Africa and the results have been that in general South Africa is cointegrated with other emerging markets but not really with African nor developed markets. Short-run analysis with the error correction was carried out and showed that in general markets respond slowly to any disequilibrium. Innovation accounting methods showed that the country placed first in Cholesky ordering dominates the other one. Multivariate cointegration was carried out using three selections of 4, 6 and 8 market portfolios. One of the markets was SA and the others were all chosen based on the criteria that they are not pair-wise cointegrated with SA. The level of cointegration varied depending on the portfolios, as did the error correction rates, impulse responses and variance decomposition. The one constant was that the USA dominated any portfolio where it was introduced. Recommendations were finally made about which market portfolio an investor should consider as most favourable.
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  • Date Issued: 2011
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